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Austria’s APK to up absolute returns, Valida underweights credit

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AUSTRIA - Austria's APK Pensionskasse plans to increase absolute return investments, while its competitor Valida Pension is to reduce its allocation to credit.

Christian Böhm, CEO of the €2.5bn APK said the fund will assess a range products and providers to identify strategies that fit the portfolio. (See earlier IPE article: Share of long-only investments will reduce - APK ) The strategy will not involve adding a limited number of absolute return mandates, he insisted.

"Some investments that are not purely long-only may not count as hedge funds, although for regulatory reasons we might have to include them in this category," Böhm noted.

The fund said it had been prepared to "step on the brake" in 2009 when it came to equity exposure. It has also only increased this gradually in 2010, with most portfolios holding between 15% and 45%, Böhm continued.

Böhm confirmed that this strategy might have cost some performance: APK reported a 7.9% return for 2009, which is below the market average of 9%. (See earlier IPE article: Austrian company funds enjoy a better year)

APK also diversified its fixed income portfolio in 2009 by raising the proportion of emerging market corporate debt while at the same time reducing its exposure to government bonds - "in some portfolios down to a 0%-quota," Böhm noted.

Meanwhile the €3.2bn Austrian multi-employer fund Valida Pension has reduced its overweight in corporate bonds, which had helped it outperform the market in 2009 with a 10.37% return. (See earlier IPE article: ÖPAG rebrands as Valida Pension)

From a two percentage point overweight on its 10% strategic exposure, the fund has now reduced the exposure to credit to 8%, Georg Dax, a director at Valida Pension, confirmed to IPE.

Similarly, the fund has reduced its exposure to high yield from a one percentage point overweight to 2% overall, well below the strategic exposure of 4%.

"At the moment we are sticking to this tactical allocation but changes in the economic environment might of course lead to changes," Dax noted.